FINANCIAL OVERVIEW

Business performance

Net sales for the fiscal year by 3.8% year on year, to ¥155,503 million. In terms of profit, operating profit was ¥12,439 million (a decrease of 3.7% year on year) mainly due to a decrease in net sales, and ordinary profit was ¥12,704 million (a decrease of 16.4% year on year) mainly due to foreign exchange losses and a decrease in share of profit of entities accounted for using equity method. Profit attributable to owners of parent was ¥7,668 million (an increase of 43.4% year on year).

During the fiscal year ended March 31, 2020, the Japanese economy was treading water mainly due to stagnant exports which resulted from the slowdown in the Chinese economy, despite a gradual recovery in private consumption. Beginning in the fourth quarter, with a severe contraction in economic activities due to the COVID-19 global pandemic, the future has become unclear. Regarding the global economy, while there were continued effects of trade friction between the US and China on the real economy, from the fourth quarter, demand evaporated due to turmoil in the supply chain caused by the COVID-19 pandemic and stay-at-home orders, leading to a critical situation.

In the chemical industry, while raw material costs are unstable mainly due to increasing tension in the Middle East, and the forex market is experiencing yen appreciation due a shift to easing in US monetary policy and other factors, from the fourth quarter, the COVID-19 pandemic has had great effects on the business environment, including plunging oil prices and turmoil in the currency market, creating an unpredictable situation.

FY2015 FY2016 FY2017 FY2018 FY2019
Net sales(Millions of yen) 157,992 150,166 161,692 161,599 155,503
Operating profit(Millions of yen) 12,486 13,647 11,999 12,919 12,439
Percentage of operating profit to net sales(%) 7.9 9.1 7.4 8.0 8.0
Ordinary profit(Millions of yen) 13,294 15,341 13,866 15,205 12,704
Percentage of ordinary profit to net sales(%) 8.4 10.2 8.6 9.4 8.2
Profit attributable to owners of parent(Millions of yen) 6,926 10,192 9,272 5,345 7,668
Percentage of profit attributable to owners of parent to net sales(%) 4.4 6.8 5.7 3.3 4.9
Net income per share (yen) *1 314.13 462.28 420.57 242.50 347.87
ROE (Return on equity) 6.2 8.7 7.4 4.1 6.0
ROA (Return on assets) *2 7.5 8.5 7.2 7.7 6.8
Overseas sales(Millions of yen) 63,914 59,807 67,940 61,537 60.179
overseas sales ratio(%) 40.5 39.8 42.0 38.1 38.7
Cash dividends paid per share(yen) *1 85.0 100.0 110.0 125.0 140.0
Dividend payout ratio(%) 27.1 21.6 26.2 51.5 40.2

Note:Sanyo Chemical and its Japanese consolidated subsidiaries, which had mostly been using the declining balance method for depreciation of property, plant and equipment (using the straight-line method for the buildings acquired after April 1, 1998, except building facilities) adopted the straight-line method from FY2016.

  • 1:Sanyo Chemical conducted a reverse stock split at a ratio of one share for every five shares on October 1, 2016. The figures for net income per share and cash dividends paid per share are amounts on the assumption that Sanyo Chemical conducts the reverse stock split on the beginning of previous fiscal year.
  • 2:ROA (Return on assets) is calculated based on ordinary income.

Financial position

Equity ratio rose by 4.6 percentage points to 71.4% from 66.8% as of the end of the previous fiscal year. Net assets per share decreased by ¥78.70 to ¥5,789.88 from ¥5,868.58 as of the end of the previous fiscal year.

Total assets at the end of the fiscal year under review decreased by ¥14,756 million compared with the end of the previous fiscal year, amounting to ¥178,873 million. Current assets decreased by ¥9,217 million from the end of the previous fiscal year to ¥85,835 million mainly due to a ¥6,268 million decrease in notes and accounts receivable – trade and a ¥1,141 million decrease in cash and deposits. Non-current assets decreased by ¥5,539 million from the end of the previous fiscal year to ¥93,038 million mainly due to a ¥6,162 million decrease in investment securities. Current liabilities decreased by ¥9,757 million from the end of the previous fiscal year to ¥42,766 million mainly due to a ¥4,803 million decrease in accounts payable – trade and a ¥2,529 million decrease in electronically recorded obligations – operating. Non-current liabilities decreased by ¥2,473 million from the end of the previous fiscal year to ¥6,009 million mainly due to a ¥1,400 million decrease in long-term borrowings and a ¥1,286 million decrease in deferred tax liabilities. Net assets at the end of the fiscal year under review decreased by ¥2,525 million from the end of the previous fiscal year, to ¥130,097 million.

FY2015 FY2016 FY2017 FY2018 FY2019
Current assets(Millions of yen) 80,997 85,334 88,942 95,053 85,835
Non-current assets(Millions of yen) 94,323 101,529 110,236 98,577 93,038
Net assets(Millions of yen) 175,321 186,863 199,179 193,630 178,873
Current liabilities(Millions of yen) 42,777 44,464 50,197 52,524 42,766
Non-current liabilities(Millions of yen) 14,258 14,747 12,712 8,482 6,009
Shareholders’ equity(Millions of yen) 112,019 121,603 130,099 129,371 127,635
Shareholder’s equity ratio(%) 63.9 65.1 65.3 66.8 71.4
Net assets per share(yen) *1 5,080.28 5,515.51 5,901.23 5,868.58 5,789.88
Research and development cost(Millions of yen) 5,622 5,443 5,365 5,569 5,322
Investment in plant and equipment(Millions of yen) 14,333 13,500 13,923 10,848 8,219
Depreciation and amortization(Millions of yen) *2 9,256 7,412 8,299 9,087 9,078
Number of employees 1,992 1,966 2,053 2,078 2,060
  • 1:Sanyo Chemical conducted a reverse stock split at a ratio of one share for every five shares on October 1, 2016. The figures for net assets per share are amounts on the assumption that Sanyo Chemical conducts the reverse stock split on the beginning of previous fiscal year.
  • 2:Sanyo Chemical and its Japanese consolidated subsidiaries, which had mostly been using the declining balance method for depreciation of property, plant and equipment (using the straight-line method for the buildings acquired after April 1, 1998, except building facilities) adopted the straight-line method from FY2016.

Cash flow

Cash and cash equivalents (“cash”) as of the end of the fiscal year under review amounted to ¥18,009 million. This marked a decrease of ¥1,141 million compared with the end of the previous fiscal year.

Net cash provided by operating activities amounted to ¥17,232 million (compared to ¥14,603 million in net cash provided during the previous fiscal year). This result was mainly due to the cash inflow from profit before income taxes of ¥11,008 million and depreciation of ¥9,159 million, which outweighed the cash outflow mainly from the decrease in income taxes paid of ¥5,305 million.

Net cash used in investing activities amounted to ¥11,115 million (compared to ¥11,312 million in net cash used during the previous fiscal year). This result was mainly due to a cash outlay of ¥8,194 million for purchase of non-current assets.

Net cash used in financing activities amounted to ¥7,084 million (compared to ¥1,492 million in net cash used during the previous fiscal year). This result was mainly due to the cash outflow from dividends paid of ¥2,973 million and net decrease in borrowings of ¥2,282 million.

FY2015 FY2016 FY2017 FY2018 FY2019
Operating activities(Millions of yen) 22,625 20,416 15,710 14,603 17,232
Investing activities(Millions of yen) -13,510 -14,198 -14,198 -11,312 -11,115
Financing activities(Millions of yen) -5,493 -1,043 -7,328 -1,492 -7,084
Cash and cash equivalents at the end of the year (Millions of yen) 19,323 23,138 17,377 19,151 18,009

Fiscal Year 2020 Forecast

Regarding our consolidated earnings forecast for the fiscal year ending March 31, 2021, considering the unclear future business environment due to the COVID-19 global pandemic and the plunge in the oil and petroleum product markets, we have decided that it is too difficult to reasonably calculate our earnings forecasts at the current stage, and have left them undecided. We will promptly release the earnings forecasts at the point in the future when we can make reasonable calculations.

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